TOPIC: PRICING OF HEALTH CARE SERVICES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The pricing of health care is influenced by the accessibility, availability and utilization level of health care infrastructure; this will determine whether the health care price will be highly charged, moderately charged or lowly charged. It is imperative to note that health care infrastructure is understood in both qualitative and quantitative terms to mean the quality of care and accessibility to health care delivery within a country (Ichok and Leibbrandt, 2003). It is judged by the quality of physical, technological and human resources available at a given period. The pricing of these resources will determine the actual cost to be paid by an individual who needs health care attention. Physical structure entails the buildings and other fixed structures such as pipe borne water, good access roads, electricity and so on within the healthcare environments, whilst the technology is about the equipments meant specifically for hospital use including surgeries (Erinosho, 2006). This also includes computer equipments and consumables while human resource comprises the health professionals including doctors, pharmacists, nurses, midwives, laboratory technologists, administrators, accountants and other sundry workers. All these put together form the structure upon which the healthcare delivery is anchored in any society and the determinants of its infrastructure.

Health care infrastructure is a part of a larger concept of the health system which contains the health policy, budgetary allocation, implementation and monitoring (Oladeji, 2006). This is larger in concept and more robust than a mix of facilities, medical consultation in terms of diagnosis, treatment and compliance. It also involves the healthcare consumers and other factors associated with or adjunct to health-care delivery. The differences and fluctuation in the prices of health care infrastructural affects the price discrimination in the pricing of health care delivery services in Nigeria. To prevent monopolistic and exploitative tendency of health care service provider governments, through ministries of health and other related ministries and agencies play an important role in health pricing and development by strengthening health systems and generation of human, financial and other resources. This allows health systems to achieve their goals of improving health, reducing health inequalities, securing equity in health care financing and responding to population needs.

Improved health outcomes are not attributable to health systems alone, as evidence has shown, but to social, economic, cultural and environmental determinants also, as reflected in the WHO conceptual framework of Health for All. The role of governments in health development is well documented worldwide and is illustrated by the impressive growth of health systems, initiated and supported by governments and pursued through partnership with the private sector, nongovernmental organizations and charitable institutions. Governments, which levy taxes and benefit from natural resources, have social obligations to provide security and to facilitate socioeconomic development, including education and health development. The dramatic changes and challenges which took place during the last four decades of the 20th century have greatly affected, and led to a repositioning of, the role of governments in health as well as other social sectors. Moves towards democracy, decentralization and a more active role for civil society in governance, and the growing importance of the private sector in socioeconomic development, have been accompanied by policy changes reflecting more privatization, a more restricted role of government in policy development, strategic planning and management, and greater reliance on market forces.

This study therefore becomes interesting because it captures an empirical investigation into the gaps which previous research work has created. There are very few literatures on the pricing of health care service delivery in Nigeria and most available works focused solely on government health spending and Nigerian economic growth. Hence, the primary focus of this study is to examine the pricing of health care delivery services in Nigeria using the health care service providers in Ijebu-Ode local government areas.

1.2 Statement of the Problem

Since the cost of quality healthcare is very high in Nigeria and with an increasing deteriorating living standard where 50% of the entire population in Nigeria could be said to have no access to quality healthcare, simply because they cannot afford such services even if they should demand for them (Ichoatku et al, 2003). The poverty scenario in Nigeria can also be linked to the absence of adequate health facilities, which can be reduced, if not totally eradicated, by health interventions (UNDP, 2004). Less than 1% of GDP was allocated to health care provision in Nigeria; about 2% of government and oil revenue was allocated to health sector in Nigeria between 1981 and 2012(CBN, 2012). Ogunbekun et al (1999) noted that low financial commitment will result in inequality in access to health care resources.

Therefore, since majority of Nigerians are poor and pay for their health care out of their pocket (NQAI, 1994), many may be left out of health care provision. Nigeria Project Agenda (2007) has demonstrated that the accessibility to health care facilities in Nigeria is low; it was revealed that only 3 out of 5 Nigerians have access to health care facilities. The aforementioned problems are the motivational problems that this study is interested to examine and efforts would be made to investigate the economic factors that affect pricing of health care service delivery in Nigeria.

1.3 Objectives of the Study

The broad objective of this study is to examine pricing of health care services in Nigeria. The specific objectives are:

i.            To examine the perception of health care service providers in Ijebu-Ode on the factors influencing the price of their health care services.

ii.          To examine the problems and difficulties in obtaining medical care services in Ijebu-ode health centers.

1.4 Research Questions

The following research questions are examined:

1.     What are the factors affecting the price of health services in Nigeria?

2.     What are the problems of obtaining medical treatment in Ijebu-ode local government?

3.     To what extent will the growth of the economy be determined by the health services?

4.     Is there significant different between the health care service delivery offered by the orthodox hospitals and the one offered by the traditional hospitals?

1.5 Research Hypothesis

The followings are the hypothesis used in this research work:   

H_0: represents Null Hypothesis

H_1:  represents the Alternative Hypothesis 

Hypothesis one

H₀: The price of health care has no significant effect on the demand for health care services.

H₁: The price of health care has significant effect on the demand for health care services

Hypothesis Two

H₀: Income has no significant effect in determining the demand for health care services.

H₁: Income has significant effect in determining the demand for health care services.

1.6 Justification of the Study

The justification of the research lies in the fact that healthcare demand by individuals and households is influenced both by their perceived state of health-the frequency of illness (morbidity) and by economic factor such as income and prices. Economic theory has it that whatever is purchased depends on income available and the relative prices of commodities. When income is low and prices are high, quantity demanded of any commodity will certainly be low. Healthcare demand is not exempted from this theory. This is why individuals’ income and prices of health services must be taken into serious consideration when drawing up policies that will aim at encouraging high demand for health goods and services and government expenditure to the health sector.  This is because the spending of the government on the economy as a positive or negative effect on the country and life expectancy of the citizens. Reinhart (1999) provided an interesting study of the effects of life expectancy and government spending on economic growth. Reinhart’s analysis leads to the result that longer lives are associated with faster economic growth whereas higher government spending lowers growth for any life expectancy. This latter shows an alternative discussion which captures the non-monotonic relationship between government size and growth, according to Barro (1990), and furthermore, the non-monotonic relationship between life expectancy and economic growth, in line with the recent empirical evidence (e.g Kelley and Schmidt, 1995 and Bhargava et al., 2001). We consider government spending to be productive and, in particular, we focus on the role of public expenditure devoted to health. More so, pricing of public health services can enhance life expectancy levels (Lichtenberg, 2004), which can establish a positive linkage between government spending and economic growth by affecting agents’ willingness to save.

1.7 Significance of the Study

The purpose of the project is not only to evaluate and examine the pricing of health care delivery services in Nigeria, but also to find what gaps there may be in the literature so that further study can be focused on fully these gaps.

While discussing the Delivery of health care service in Nigeria, it is very important to understand its entire basic Health structure.  The outcome of this study will be useful to academic, educators, governmental and non – governmental organization, civil societies and the general public.

It will shed more light on the effect of pricing of health care delivery services on patient, its implication on the survival of health care delivery, the need to curb inadequate health facilities and supplies among other things. The study will also fuel further research into the study, and act as consulting materials to other researcher.

1.8 Scope of the Study

The scope of this study been its searchlights on the pricing of health care delivery services in Nigeria, the study will focus on health care centers in Ijebu Ode Local Government Area of Ogun State. The major factors that are responsible for pricing of health care delivery during this period shall be discussed in detail.

1.9 Limitation of the Study

Limitation here refers to the constraints that may hamper an extensive and thorough research into the topic of the study in order to submit or present if not perfect, but a reliable analysis constraints like time, finance, accessibility to information and indeed the accuracy of the presented data and information to and the analyst.

1.10 Operational Definition of Terms

Pricing: Is process of determining what an organization will receive in exchange for their product.

Health Care: Is the diagnosis treatment and prevention of diseases, illness, injury and other physical  and mental impairment in human.       

Service: Is an intangible commodity, this services are an example intangible economic goods.

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